SYDNEY—The Reserve Bank of Australia debated suspending a planned reduction in its weekly government bond buying program at its policy meeting Tuesday, but elected to allow fiscal stimulus to do the heavy lifting of the economy as the country faces a potential plunge back into recession amid a worsening Covid-19 outbreak.

In a testimony before parliament on Friday, RBA Gov. Philip Lowe said the central bank’s board was willing to adjust policy settings, if conditions in the economy continue to deteriorate over the coming...

SYDNEY—The Reserve Bank of Australia debated suspending a planned reduction in its weekly government bond buying program at its policy meeting Tuesday, but elected to allow fiscal stimulus to do the heavy lifting of the economy as the country faces a potential plunge back into recession amid a worsening Covid-19 outbreak.

In a testimony before parliament on Friday, RBA Gov. Philip Lowe said the central bank’s board was willing to...

Employers added 943,000 jobs and jobless rate fell to 5.4% in July, the Labor Department said, signs of a strong labor market ahead of the Delta variant threat.

The surveys for the jobs report don’t fully reflect the growing threat posed by the fast-spreading Delta variant, as they were conducted in the middle of the month. That was before some local governments reimposed mask mandates and other restrictions, and before many employers announced they would require employees to wear masks, be vaccinated or get regularly tested. Companies have also delayed return-to-office plans, including announcements by Amazon.com Inc. and Wells Fargo & Co.

“The jobs recovery is continuing, but it’s different in character to any we’ve seen before,” said Nela Richardson, economist at human-resources software firm Automatic Data Processing Inc. “I had been looking at September as a point when we could gain momentum—with schools back in session and vaccines widely available....

Good day. Sen. Joe Manchin said he is concerned that the Fed’s easy money policies and more spending planned by Congress could exacerbate recent increases in inflation. “I am deeply concerned that the continuing stimulus put forth by the Fed, and proposal for additional fiscal stimulus, will lead to our economy overheating and to unavoidable inflation taxes that hard working Americans cannot afford,” Democrat wrote in a letter to Fed Chairman Jerome Powell. Elsewhere, the Bank of England held its benchmark interest rate at 0.1%, maintained its government bond-buying target, and said it expects annual inflation to rise to twice its target this year but that the increase will prove temporary.

Now on to today’s news and analysis.

India’s central bank left its lending rate unchanged and said indications are that domestic economic activity was picking up after a setback caused by the second wave of the coronavirus pandemic.

The “monetary policy committee voted unanimously to leave the policy rate unchanged,” Reserve Bank of India Gov. Shaktikanta Das said Friday.

With...

After a steady decline this spring, worker filings for new unemployment benefits have settled this summer at a level that is nearly double the pre-pandemic average.

The trend, some economists say, could be happening while the labor market continues to recover from the pandemic and be part of a development where claims remain higher because of greater awareness of unemployment insurance programs.

“Many people before the pandemic just simply didn’t apply for unemployment insurance, even if they were eligible,” Daniel Zhao, senior economist at job-search site Glassdoor, said. “So we might see permanent higher levels of claims, even if the jobs recovery is continuing,”

Mr. Zhao said that while the totals for new jobless claims have started to level off, he thinks the labor market and broader economy continue to steadily recover despite risks from the Covid-19 surge driven by the Delta variant, supply-chain constraints and a shortage of available...

Brazil’s central bank raised its benchmark lending rate by a full percentage point, picking up the pace of its increases after inflation accelerated and the economy showed unexpected strength, and said it expects to increase it by the same amount at its next meeting.

The bank raised the rate, known as the Selic, to 5.25% on Wednesday from 4.25%, the fourth increase in as many policy meetings. The Selic started the year at a record low of 2%, and the bank raised it by three-quarters of a percentage point at each of the previous...

WASHINGTON—The U.S. trade deficit likely widened to near a record in June as the resurgent American economy drove strong demand for foreign-made goods.

Economists surveyed by The Wall Street Journal expect a Commerce Department report Thursday to show that the deficit in goods and services widened to $74.2 billion in June from $71.2 billion in May. That would put the trade gap just shy of the record $75 billion in March.

American consumers and businesses have stepped up spending and investment as the economy has recovered to its pre-Covid-19 size, fueling demand for imports. Exports have grown more slowly, reflecting weaker recoveries in some other regions that have made less progress against the coronavirus.

The International Monetary Fund last week said that varying progress in vaccinations had created a fault line between countries with improving and deteriorating economic prospects. It raised its growth forecasts for the U.S. and other advanced...

Federal Reserve governor Lael Brainard answered questions during a moderated discussion at an Aspen Economic Strategy Group meeting on Friday in Aspen, Colo. She addressed the economic and policy outlook, financial stability issues, climate change risks, and the prospects for a central bank digital currency. Here is a transcript of that conversation, lightly edited for clarity.

MELISSA KEARNEY, director, Aspen Economic Strategy Group: There is a lot of uncertainty and among some, worry about what is going to happen with inflation...

Japan’s top financial regulator said his planned platform to combat money laundering could include cryptocurrency dealers, which he said have the same obligation as traditional financial institutions to make sure they don’t deal with criminals.

The Financial Services Agency has said it is planning to create a common industrywide system that financial firms could use to judge whether their clients might be terrorists and whether client accounts are at risk of being used for money laundering.

“In the sense that they are prohibited to deal with those subject to sanctions, cryptocurrency dealers are the same as banks,” said FSA chief Junichi Nakajima in an interview with The Wall Street Journal.

“Because we have the same list of international terrorists, it would be more cost-effective and more accurate if we create a shared system, rather than doing it by individual financial firms,” said Mr. Nakajima, who assumed his post in July.

Mr. Nakajima said...

Significant fiscal stimulus this year is speeding the economy’s recovery so that the Federal Reserve is able to consider lifting interest rates from near zero by early 2023, said a top central bank official in a speech Tuesday.

Fed Vice Chairman Richard Clarida said he expects that, under his current projections for inflation and employment, “commencing policy normalization in 2023 would…be entirely consistent with our new flexible average inflation targeting framework.”

Mr. Clarida was a leading architect of the Fed’s new policy framework unveiled one year ago by Fed Chairman Jerome Powell. That framework calls for the central bank to seek periods of inflation moderately above its 2% goal to make up for past misses of the target.

The Fed’s framework wasn’t designed for an environment like the current one, where prices are surging due to bottlenecks and supply shortages associated with reopening the economy from the Covid-19 pandemic. That has...

Good day. Australia's central bank will press ahead with plans to reduce its government bond buying in September, despite an economic outlook that has deteriorated sharply in just a few weeks amid Covid-19 restrictions in several cities. On the regulatory front, Securities and Exchange Commission Chairman Gary Gensler said the agency will police cryptocurrency markets as much as possible, repeating his call for Congress to grant the agency more authority and resources to regulate the sector.

Now on to today’s news and analysis.

To Western investors, China’s regulatory crackdown on superstar companies such as Alibaba Group Holding Ltd. , Tencent Holdings Ltd. and Didi Global Inc. must seem suicidal. How better to undercut growth than to kneecap some of the world’s most successful technology companies?

President Xi Jinping would beg to differ. In his estimation, technology comes in two varieties: nice to have, and need to have. Social media, e-commerce and other consumer internet companies are nice to have, but in his view national greatness doesn’t depend on having the world’s finest group chats or ride-sharing.

By contrast, Mr. Xi thinks the country needs to have state-of-the-art semiconductors, electric-car batteries, commercial aircraft and telecommunications equipment to retain China’s manufacturing prowess, avoid deindustrialization and achieve autonomy from foreign suppliers. So even as the Chinese Communist Party unleashes a multifront regulatory assault against...

Thailand’s central bank kept its record-low benchmark interest rate unchanged as the worsening Covid-19 pandemic clouds the country’s economic outlook.

The Bank of Thailand said Wednesday that its policy committee voted to keep its one-day repurchase rate at 0.50%. All seven economists polled by The Wall Street Journal expected the central bank to stand pat.

Economists...

WASHINGTON—The Securities and Exchange Commission will police cryptocurrency markets to the maximum extent possible, Chairman Gary Gensler said Tuesday, repeating his call for Congress to grant the agency more authority and resources to regulate the sector.

“Right now, we just don’t have enough investor protection in crypto. Frankly, at this time, it’s more like the Wild West,” Mr. Gensler said in prepared remarks to the Aspen Security Forum. “We have taken and will continue to take our authorities as far as they go.”

U.S. financial regulators have struggled to get their arms around the fast-growing world of cryptocurrency and related financial technologies. Unlike in the securities and derivatives markets, no single regulator oversees crypto exchanges or brokers. As the market value of the asset class has exploded, so have scams.

“Right now, large parts of the field of crypto are sitting astride of—not operating within—regulatory frameworks that...

Asia is emerging as a weak link in an otherwise strong global economic recovery, as new pandemic restrictions restrain manufacturing in some countries and the exports that have powered the recovery in China show signs of slowing.

With progress on vaccinations slower than in the West, Asia is hitting new pandemic highs driven by the Delta variant of the coronavirus. The spread of the virus is threatening to hurt consumer confidence and erode the advantage of many Asian economies as manufacturing powerhouses.

Countries in Southeast Asia have been among the hardest hit, prompting new social-distancing restrictions and lockdowns in countries that had largely avoided those measures earlier in the pandemic. As factory production contracts across Southeast Asia, Indonesia and Malaysia, which have recently faced surging caseloads and Covid-19 deaths, have been among the worst affected, according to IHS Markit .

Foreign demand has propelled export economies...

BRUSSELS—The European Union has begun withholding funds from Poland and Hungary, escalating the battle over democratic standards that is deepening the East-West divide in the bloc.

The EU and most governments in its Western region are concerned about legal changes by Poland and Hungary that they think are eroding the rule of law, weakening judicial independence, and breaching human rights. They are particularly alarmed by an effort by Warsaw to assert the primacy of Polish law over EU law and court decisions.

The two nations, which are among the biggest net recipients of European money, say the pressure from Brussels represents an ideological attack on their values and an attempt by unelected officials to curtail the rights of member countries to shape their own political systems and laws.

The EU has had disputes for years with Poland and Hungary over issues such as gay rights, which are hot-button topics in many former communist countries. Conservative...

WASHINGTON—Treasury Secretary Janet Yellen on Monday revealed further measures to avoid breaching the federal government’s borrowing limit and urged Congress to increase or suspend the ceiling, which went back into effect on Sunday.

Starting Monday, the Treasury Department will suspend reinvestments by a number of retirement funds for civil servants and postal workers, Ms. Yellen said in a letter to congressional leaders. The funds will be made whole once the debt limit is either suspended or increased, she said.

“I respectfully urge Congress to protect the full faith and credit of the United States by acting as soon as possible,” she said.

Congress voted in July 2019 to suspend the debt limit until July 31, 2021, after which the prior limit of $22 trillion would be reset to include any new borrowing in the intervening years. On Sunday, the limit was reinstated at around $28.5 trillion, a figure that includes debt held by the public and by government...

Good day. The Federal Reserve should consider starting to pull back its $120 billion-a-month in asset purchases as soon as its next meeting, Fed governor Christopher Waller said Monday. “If the jobs reports come in as I think they’re going to...then in my view, with tapering, we should go early and go fast,” he said. Elsewhere, the Reserve Bank of New Zealand said it would limit lower-deposit mortgages to 10% of new loans, down from the current 20% for owner-occupiers, because earlier lending curbs haven’t resulted in a sufficient reduction in risky loans.

 Now on to today’s news and analysis.

New Zealand’s central bank said it plans to further tighten home mortgage lending as earlier curbs haven’t produced a sufficient reduction in what it considers risky loans.

Owner-occupier mortgages deemed riskiest would be limited to 10% of new loans, down from 20%, the Reserve Bank of New Zealand said Tuesday. The changes would be implemented from Oct. 1 after consultations, it said.

The...

SYDNEY—The Reserve Bank of Australia will press ahead with plans to reduce its government bond buying in September, even as the economic outlook deteriorates sharply amid pandemic-related lockdowns in several cities.

The RBA’s decision means it will cut its government bond buying to 4 billion Australian dollars (US$2.95 billion) per week in September from A$5 billion as planned, with a further review of its buying scheduled for November.

“Prior...

President Biden’s looming decision about who should be the next Federal Reserve chairman is prompting reviews of the current chief’s record on bank regulation and how strict the postcrisis rulebook should be for Wall Street.

During Chairman Jerome Powell’s nearly four years as head of the Fed, the central bank has revamped big-bank stress tests, tailored its rules for U.S. lenders based on their size and simplified key postcrisis regulations such as the Volcker rule prohibition on proprietary trading.

Mr. Powell says that collectively the moves have clarified or better calibrated the central bank’s rules to reflect the risks posed to the financial system by the firms subject to them. In last year’s pandemic-driven, real-world stress test of the banking system, U.S. lenders emerged in solid financial shape, with stronger capital than before, he has said.

“Strong capital requirements are essential for banks, particularly for the largest banks,” Mr. Powell...

Big companies raced ahead during the Covid-19 pandemic, leveraging the changes driven by the deepest business disruption in decades to grab a larger slice of the economic pie.

Now, as the rich world bounces back from the shock, the heavyweights are extending that lead, spending more on investments and acquisitions, snapping up talent, employing big data and leveraging new technologies.

Their success could set up a clash with antitrust regulators.

The Biden administration is pushing new policies aimed at promoting competition in the U.S. economy, warning that fewer large players are controlling more of the market. The European Union’s powerful antitrust regulator is re-evaluating how it polices the digital economy.

Economists believe the gap between large and small companies helped explain poor productivity growth before the pandemic. Traditionally, innovations spread from company to company, helping the broader economy. But in recent years,...

The Bank of England is expected to stand pat on monetary policy. Economists are looking for BOE officials to revise their inflation forecast higher, but hold off on any major moves while the outlook remains clouded by the recent spike in Covid-19 cases.

The U.S. trade deficit likely widened in June. Preliminary figures already show record goods imports during the month as Americans buy more from overseas while the economy expands and domestic producers struggle to keep up.

Good day. During Chairman Jerome Powell’s nearly four years as head of the Fed, the central bank has revamped big-bank stress tests, tailored its rules for U.S. lenders based on their size and simplified key postcrisis regulations such as the Volcker rule prohibition on proprietary trading. But some progressive Democrats say the Fed hasn’t been tough enough on large financial firms under Mr. Powell, a Republican. He isn’t a lock to be re-selected by President Biden, even though he is widely viewed as the front-runner. Meanwhile, investors barely reacted last week when Fed officials signaled they could announce plans to start reducing their $120 billion a month in bond purchases later this year, suggesting there won’t be a 2013-style taper tantrum when the cuts come.

 Now on to today’s news and analysis.

President Biden’s looming decision about who should be the next Federal Reserve chairman is prompting reviews of the current chief’s record on bank regulation and how strict the postcrisis rulebook should be for Wall Street.

During Chairman Jerome Powell’s nearly four years as head of the Fed, the central bank has revamped big-bank stress tests, tailored its rules for U.S. lenders based on their size and simplified key postcrisis regulations such as the Volcker rule prohibition on proprietary trading.

Mr. Powell says that collectively the moves have clarified or better calibrated the central bank’s rules to reflect the risks posed to the financial system by the firms subject to them. In last year’s pandemic-driven, real-world stress test of the banking system, U.S. lenders emerged in solid financial shape, with stronger capital than before, he has said.

“Strong capital requirements are essential for banks, particularly for the largest banks,” Mr. Powell...